Showing posts with label economic cycle. Show all posts
Showing posts with label economic cycle. Show all posts

Tuesday, January 1, 2013

Market Cycles Vs Economical Cycles

The indices help the financial growth of listed companies; indices give us indications of future economic cycle. Therefore, the market operates in advance. In summary, the market cycle has a lead time of one or two quarters on the real economy. The graph above illustrates the gap between the economic cycle and the market cycle yellow blue. For long-term investors, it helps to have an idea of the sectors that beat the market during different periods.

In times of prosperity (middle-top bull), you have the total: robust growth, falling unemployment, rising wages, the credit facility. The technology sector, basic industry and capital goods will cost to investors.

 In times of crisis (early top-bear), we arrive at an inflection point. More money circulates with wage increases and low interest rates. Therefore, inflation appears like toothpaste out of its tube, which will cause a general decline in consumption. During this period, the non-cyclical sectors such as the food sector perform well. Finally, precious metals, energy and utilities benefit to the mortification of the purchasing power of households, inflationary effects.

In a recession or depression (early-late bear), households are deleveraging and they consume little, companies are restructuring according to demand and credit activity is scarce. So, we are in a vicious circle and despair reign. At stock, investors are in general, sector based discrimination favoring defensive sectors such as sustainable consumption and unsustainable and health.

 During recovery (late early bull-bear), returns for hope everything is done to break this impasse whatever means: growth is back, the activity is not shrinking consumption and restarts more beautiful. The sectors that will benefit from this new momentum are finance, health and consumer always.

 Hope this article will help you in enhancing your knowledge in the future your future stock market investments.

Saturday, December 19, 2009

How will be the crude oil prices in the months to come?

How will be the crude oil prices in the months to come?
The crude oil prices which was hovering around 12 to 15 dollars in 1998 has started the rally from that level towards 145 USD in 2008. A correction was set from that level.

Before the end of 2008, it tested USD 30 region and bounced back towards 80 USD. Since then it is trading in the region between USD60 and USD80.

Technically every Markets peaked in 2008 except Gold. Crude oil also peaked in 2008. The peak of Crude Oil was coincided with the start of recession in all global Economies. The demand for Energy was slowed by the slowing down of global economies. So the prices of crude oil stabilized around 70 USD in 2009.

Unless the Global Economies start showing growth the demand for Crude oil is more less would be the same. There would not be significant increase in the demand.

No Economic cycle shows fast decline followed by immediate growth. It will surely take to start the next cycles, which means we are likely to see some more years of downtrend.

Until then, we can be sure that oil prices would move above the 80 Dollars mark in the near future. Technically also, any which corrects itself more than one third will see a severe bear market. So, crude oil prices are likely remain in a range below USD 80 for few more years.

I may not be astonished in seeing Crude below USD30 in another 2 years.